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The American Presidency 1901–2000

Reagan: recovery, rearmament and Iran-Contra

  • 3 things to know
  • A2 Unit 1

Overview

Chief cost of Reagan's economic policy, scale of the defence build-up and strategic Defense Initiative.

What you need to know

Answer each one before you reveal it.

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Key term

What was Reaganomics?

Key term

What was the chief cost of Reagan's economic policy?

Key term

How did Reagan handle the air traffic controllers' strike of 1981?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    What was Reaganomics?

    Model answer

    Reaganomics combined large tax cuts, reduced domestic spending, deregulation and tight control of the money supply, on the theory that lower taxes would generate enough growth to restore revenue.

  2. 2

    What did the tax legislation of 1981 do?

    Model answer

    The Act of 1981 cut personal income tax rates by roughly a quarter over three years and reduced the top rate sharply, the largest tax reduction in American history to that date.

  3. 3

    What happened to the American economy in 1981 and 1982?

    Model answer

    Tight money to break inflation produced the worst recession since the 1930s, with unemployment reaching almost eleven per cent at the end of 1982.

  4. 4

    What was the economic record after 1983?

    Model answer

    Inflation fell from over thirteen per cent to about four, the economy grew strongly for the rest of the decade and millions of new jobs were created.

  5. 5

    What was the chief cost of Reagan's economic policy?

    Model answer

    Tax cuts alongside a vast increase in defence spending tripled the national debt, and the United States turned from the world's largest creditor into its largest debtor.

  6. 6

    How did Reagan handle the air traffic controllers' strike of 1981?

    Model answer

    Reagan dismissed more than eleven thousand controllers who refused to return to work. The dismissals broke the strike and signalled a far harder attitude towards organised labour.

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